This Morning: Apple Analysts Doing Lines, No Sign of a MSFT Breakup

By Tiernan Ray

Here are some things going on this morning in your world of tech:

Shares of Apple (AAPL) are up $3.12, or 0.7%, at $475.42, as the iPhone 5S and 5C went on sale overnight in multiple territories.

Which means it’s time for the Street to take another look at its numbers concocted over the last few days. R.W. Bair’s Will Power, reiterating a Neutral rating, and a $450 price target, writes that stores he’s visited in Chicago, Dallas, and Milwaukee had 100 to 150 people in line a couple hours before opening, which he writes was down from 200 to 300 in prior years. He also observed thinner lines at AT&T (T) and other carrier stores. Overseas lines “appeared solid,” he writes.

CNBC‘s John Fortt was at the Palo Alto store this morning, writing that CEO Tim Cook shook hands with the first hundred or so individuals in line there. (Somehow, CNBC was given a gold model by AT&T to show off on Squawk on the Street.)

Piper Jaffray‘s Gene Munster, who maintains an Overweight rating on Apple stock, and a $640 price target, writes the lines his team observed in New York, San Francisco, and Minneapolis, were about flat with last year or “up slightly,” while the line at the flagship store was “up 83%,” in his count. He thinks that supports a view offered Wednesday evening that the company can sell 5 million to 6 million units.

But Timothy Arcuri of Cowen & Co., who has an Outperform rating on Apple, and a $550 price target, writes his meetings with buy-side folks this week suggest investors are expecting 7 million to 8 million units this first weekend, which he actually thinks is “doable.”

“Our team observed very long lines throughout both NYC and Boston this morning,” writes Arcuri, “and while we believe the iPhone 5S is supply constrained (less due to fingerprint sensor yield issues and more due to controlled supply on AAPL’s part, which we think has maintained a conservative build out of the gate), this should not gate reported weekend sales numbers as shipments are independent of this number.”

Macrumors‘s Jordan Golsonreports lead times for the iPhone 5S have been slipping in the company’s online store system, with the gold-colored model apparently pushed out into October for availability.

The media, meanwhile, has been obsessed this morning with the story of efforts to hack the fingerprint encryption feature on the new iPhone 5S. Reuters‘s Jim Finklewrites that Chicago-based venture capital firm IO Capital donated $10,000 to a $13,000 fund “along with bottles of booze, Bitcoin currency, books, and other goodies” to hackers to get around the security feature. CNBC had an interview with an IO executive, promoted all morning with mentions of “money, booze, and hackers.”

Of course, the arrival of the phones has led to the customary “tear down” by the folks at iFixit. The firm identified several parts from Broadcom (BRCM), Avago Technologies (AVGO), and Skyworks Solutions (SWKS). The Benchmark Company‘s Gary Mobley this morning writes “Most component suppliers featured in the iPhone 5 are also included in the 5s/5c including Broadcom as the combo connectivity chip supplier and supplier for the touch screen controller IC.”

“Broadcom’s inclusion should, at least for the moment, alleviate investor fears that Apple is developing its own connectivity silicon (or possibly using another merchant supplier).”

Shares of Microsoft (MSFT) are down 65 cents, or 1.9%, at $32.99, following the company’s analyst day meeting at the Meydenbauer Center in Bellevue, Washington, near its Redmond headquarters.

The company yesterday issued a summary of how it will in future report results in five different segments, “Devices & Consumer,” consisting of a “licensing” part, a “hardware” part, and an “other” part; and “Commercial,” consisting of a “licensing” part and an “other” part.

Pacific Crest’s Brendan Barnicle, who has a Sector Perform rating on the shares, writes that nothing at the meeting suggested the company will break up into separate businesses anytime soon, as some investors have desired. He writes “Microsoft could not answer investors’ most pressing question at yesterday’s analyst day: Will Microsoft’s board allow a new CEO to fundamentally restructure the company?”

Shares of U.K.-based Xyratex (XRTX), which makes disk storage subsystems and manufacturing equipment, are down 12 cents cents, or 1%, at $10.36, but were up about 1% earlier, following an interesting piece on SeekingAlphalate yesterday by Kingsley Park Capital, which notes that activist fund Baker Street Capital has invested half its fund in the stock and owns 23% of The company. Baker Street, according to the article, has recently been a prominent investor in Sears Holding (SHLD) and previously driven up that stock’s price.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.